Companies need to innovate to disrupt tech disruption

DISRUPTIVE technologies may be a challenge to traditional business models but companies can still do well if they innovate to disrupt the disruption, say observers. "Only companies which are willing to take the risk and disrupt themselves will survive," said Lyon Poh, partner and head of digital innovation at KPMG in Singapore.

Disruptive technologies are expected to reshape business models and how companies operate in the future. While disruption brings greater competition into the marketplace, such that consumers benefit, it also represents significant headaches for companies with traditional business models.

A case in point is how Uber and GrabTaxi have disrupted the mainstream taxi service model, and how Amazon has caused brick-and-mortar retailers to recognise the significant threat posed by online sites such as Amazon's own Web portal and others.

Going into 2016, observers believe the disruption brought about by technological advances can only get stronger.

"Imagine self-organising supply chain networks driven by the Internet of Things (IoT) and analytics without any human interaction. These disruptive technologies are a challenge to traditional business models but there are opportunities to be seized," said Mr Poh.

At its simplest level, IoT refers to a giant network of connected "things", which may include any device with an on/off switch linked to the Internet that can interact with each other through the exchange of data. Experts predict that IoT will provide virtually endless opportunities and connections globally in ways that are yet to be fully understood.

Analytics is a tool that companies increasingly use to effectively analyse and make sense of the avalanche of data to predict what will happen next in order to make smarter decisions and improve their business outcomes.

"Moving forward, I would expect industries to shift from being product-driven to being service-driven. They will focus more on their core business, adopt a disruptive innovation approach and consume services from each other based on a flexible and open architecture," said Mr Poh.

Such innovation, however, does not have to be a green-field exercise in creativity.

"There are proven methodologies and approaches to helping businesses think out of the box and solve problems. This often involves leveraging ideas and constructs from a wide array of non-traditional business, IT and finance disciplines," said Mr Poh.

Examples include the sociological and behavioural sciences, data science and design thinking.

This concept is familiar to Micro-Mechanics Holdings, which designs, manufactures and markets high-precision tools, parts and assemblies for the semiconductor, medical, aerospace and other high-tech industries.

"In our own way, we have been the initiators of 'disruptive innovation' within our organisation as a way of boosting operational efficiency and productivity at all levels of our group and alleviating the constant price and cost pressures in the semiconductor industry," said Chow Kam Wing, executive director and chief financial officer at Micro-Mechanics.

This new 3D technology may disrupt not just current wafer fabricators but also the whole semiconductor value chain, as suppliers in the industry will have to adapt to ensure their solutions remain relevant.

To address the potential disruption in its industry, Micro-Mechanics has already started focusing on design, materials, engineering and manufacturing processes to meet its customers' future needs.

The company has also developed its own proprietary initiatives such as a 24/7 Machining concept, forming an Application Process Engineering department, and implemented a worldwide Enterprise Resource Planning system.

"By implementing these operational practices, we have set a very high, if not disruptive, bar for lower cost, faster cycle time, flawless quality and less direct manpower," said Mr Chow.

Another company positioning to capitalise on the opportunities created by disruptions is Y3 Technologies, a homegrown software solutions provider.

Its deputy chairman and executive director, Robert Yap, believes that some of the popular buzzwords in today's technologically savvy world - mobile devices, cloud technology, big data, and pervasive high-speed Internet connectivity - will become the core disruptive technologies.

Traditional businesses therefore must address and complete their go-to-market strategy with a digital strategy, said Mr Yap.

"It is not about joining the chorus of others building e-commerce platforms or mobile applications and then say, I have one too. That would be a mistake," he said.

"If you believe that content is the new intellectual property, then the digital strategy needs to encompass several core capabilities that influence and drive both the offline and online business segments. Digital marketing, content creativity, big data analytics, digital campaign, product curation and personalised service are all part of the e-commerce ecosystem," added Mr Yap.

The lines between the chief marketing officer and chief information officer, two key functions of growth organisations, are also beginning to blur and shared digital and technology budgets are becoming common.

"The traditional business that takes the digital strategy very intentionally in its boardroom, ties it to core business defensive and growth strategy, and runs faster and sets the pace for the rest will most likely last the distance and be at the head and not the tail," Mr Yap added.

At KPMG, Mr Poh said the firm is also preparing for potential disruptions caused by advances in technology.

The firm is looking at digital and innovation as a tool to ensure that it can continue to add value to its clients in the age of disruptive technologies.

Methodical approach

KPMG has started a Digital + Innovation unit, whose mandate is to leverage the firm's traditional strengths and complement them with a methodical approach to using innovation processes to help its clients solve business problems.

While the aim is to provide solutions to its clients, KPMG believes there could be wider industry benefits as well.

"Where this process creates a product or service which may interest the marketplace, the intellectual property created may be used to start a new joint venture to create a commercially offered product or service," said Mr Poh.

Mr Yap of Y3 Technologies believes that leadership mindsets to ride the wave of technology disruption will need to focus on three things.

"Hunger to succeed and stay ahead; making creativity and ideation a shared goal and responsibility; and learning quick, getting results fast and keep moving forward," he said.

This series is brought to you by CPA Australia, in conjunction with this year's CPA Congress on Leadership, Strategy and Business that will be held on Oct 14, 2015.